That's the nature of bubbles. This is a bet about whether there's a bubble or not. IF there is a bubble, of course it's going to look like Sam has a slam dunk win here-- until the bubble pops and then it looks obvious that Sam could not have won. This is irrespective of the bubble popping in 2019 and thus Sam losing the bet and 2021 - where Sam wins the bet but loses the point.
The problem with bubbles is that when you're in them, it's very hard to know you're in a bubble and thus crazy things seem perfectly rational.
I'm not saying we're in a bubble or not in early stage investment--- I'm just pointing out the nature of bubbles.
The funny thing is, this is the first time I remember everyone speculating on if we are in a bubble or not. Once bitten, twice shy I suppose.
But, I also think that although there is a lot of optimism a lot of it rightfully there. Technology has been creating a revolution in communication, media, entertainment and just about every other industry. The internet finally arrived for the masses in the mid-2000's followed by the smart phone revolution followed by tablets and smart devices. There's simply a lot of opportunity out there.
I don't think we are in a bubble so much as in the middle of a rare technological revolution. So many things are happening at once between computer systems becoming so powerful and networks becoming so large and fast, etc. Old industries are dying while new, more profitable companies take over.
A bubble would require an investment firm to make an intentionally risky investment with the intention of selling off at the IPO prior to the collapse of the company. This is what we saw in 2000 and in the 2009 housing bubble.
The current state of affairs has companies being bought in cash by other large companies such as Google, Apple, etc. So the public never gets the chance to purchase overly valued stock. Further, of the companies that did have an IPO (Facebook, Groupon, Google) none of them had outrageously high growth. In fact, most of the companies stock values dropped after an IPO (at least initially).
All of those are clear signs we are not in a bubble, as it is financially impossible at this point, regardless of the "nature of bubbles." However, 5 years from now, who knows! The bet was for 2020, not 2016.
The problem with bubbles is that when you're in them, it's very hard to know you're in a bubble and thus crazy things seem perfectly rational.
I'm not saying we're in a bubble or not in early stage investment--- I'm just pointing out the nature of bubbles.